Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NuScale Power Corp (SMR, Financial) has been authorized to proceed with Phase 2 front-end engineering design (FEED) for the RoPower project in Romania, indicating progress in international collaborations.
- The company is well-positioned in the growing nuclear energy market, with strong bipartisan support in the US for advanced SMR and nuclear energy.
- NuScale's SMR technology is the only one with design certification from the US Nuclear Regulatory Commission (NRC), giving it a competitive edge over peers.
- NuScale has a robust supply chain and strategic partnerships, including with Doosan for manufacturing, which enhances its manufacturing readiness.
- The company has a strategic partnership with ENTRA1 Energy, which helps in deploying SMRs globally and provides a flexible business model for utilities and commercial consumers.
Negative Points
- NuScale reported a significant net loss of $74.4 million for Q2 2024, including a non-cash expense related to an increase in the fair value of warrants.
- Revenue for the quarter was only $1 million, a decrease from $5.8 million in the same period the previous year.
- The company faces challenges in securing independent third parties willing to provide risk capital for reactor deployment, which could delay projects.
- NuScale's operating loss, although reduced from the previous year, remains substantial at $41.9 million.
- The timeline for project announcements, particularly in the data center sector, remains uncertain, with complex transactions taking time to finalize.
Q & A Highlights
Q: Can you provide more details on your discussions with data center companies and the role of ENTRA1 in addressing deployment bottlenecks?
A: John Hopkins, CEO, explained that while NuScale has the technology and capacity to execute, the missing piece has been a developer. ENTRA1 has been working with NuScale for nearly two years to develop a model for approaching customers like AI centers and data centers. These industries require 24/7 clean energy but prefer not to own the nuclear asset. ENTRA1 helps by providing a build-own or build-own-transfer model, offering long-term PPAs and financing solutions.
Q: What is the timeline for announcing a project with data centers, and what progress has been made in Romania with Phase 2 FEED?
A: John Hopkins stated that while they are working hard with customers and developers, these transactions are complex and take time. Regarding Romania, the initial alignment session with the customer and Fluor Corporation is set to start soon, with the FEED Phase 2 expected to take approximately 12 months to complete.
Q: Can you provide insights into the revenue potential from the Romanian project and the company's financial performance?
A: Robert Hamady, CFO, highlighted that the Romanian project exemplifies NuScale's business model of generating pre-COD revenues from services and technology. While specific revenue guidance was not provided, Hamady noted that NuScale has achieved significant cost savings, reducing operating expenses from $55 million to an average of $43 million over the last two quarters.
Q: What are the next steps beyond FEED Phase 2 for the RoPower project, and when will revenue contributions begin?
A: John Hopkins explained that after completing the preliminary FEED, the next phase involves finalizing the engineering design to control project expenses. The goal is to secure final approval from the Romanian government for the complete project. Robert Hamady added that a revenue-generating contract has been signed, but GAAP revenue recognition will depend on future bookings.
Q: How does NuScale compete in the current landscape, particularly with data center customers?
A: John Hopkins noted that while some customers may issue RFPs involving other technologies, many discussions focus on NuScale's ability to offer build-own-transfer and build-own-operate models. NuScale's competitive advantage lies in its completed design certification with the NRC, which no other US-based technology has achieved.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
